Analysts’ Superiority in Processing Public Information: Evidence from Recommendation Revisions

In this paper, I study analysts’ superiority over the market in processing publicly disclosed earnings information by examining a sample of recommendation revisions issued subsequent to annual earnings announcements within a short period of thirty trading days. The main findings of this study are as follows: First, I provide strong evidence that these recommendation revisions convey valuable information to the market for clarifying the long term implications of recently released earnings. These revisions significantly alter the market’s belief about the value implications of announced earnings, suggesting that analysts do have superiority over the market in processing pubic information….

Author: Wang, Zheng

Source: University of Maryland

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